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Changing market makes Xcel Energy an evolving opponent for Boulder

Utility aims to be at 55 percent renewables by 2026

By Alex Burness

Staff Writer

Posted:
09/02/2017 12:02:12 PM MDT

Updated:
09/04/2017 08:10:53 AM MDT

Dave Edmisson, engineering manager, walks in front of two smoke stacks at Xcel Energy's Comanche Power Station in Pueblo in 2011. This week, Xcel announced plans to close down two of the three coal-burning units at that site. (AAron Ontiveroz / The Denver Post)

The Xcel Energy that Boulder's sought to divorce for seven years — and arguably even longer than that — is an evolving company, as far as renewable energy production is concerned.

Clean energy accounts for around 30 percent of the company's total portfolio today, Xcel reports, which is more than triple the share from a decade ago.

And Xcel is now hoping to accelerate the trend, announcing Wednesday, along with a group of stakeholders that includes Boulder, a proposal that calls for the early retirement of two coal plants in Pueblo, and potentially $2.5 billion in new clean energy investments.

If that ends up happening, it'll mean that, in the event Boulder abandons its bid to leave Xcel and form a municipal electric utility, there will be a much smaller gap the city has to fill to get to its goal of 100 percent renewable electricity citywide by 2030.

And there's reason to believe Xcel and other investor-owned utilities will continue increasing renewable generation, because it now makes sense economically, and not just environmentally.

"The biggest change is now wind power, in particular, and in not many years, solar power, too, is going be cheaper than all the power plants they have online, including the power plants that are completely paid for," said Michael Noble, the CEO of Fresh Energy in Minnesota, and a longtime "critic, adversary and ally — sometimes all in the same week" of Xcel.

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"Isn't that remarkable? A brand new industrial wind farm can generate electricity at a lower cost than a coal plant that has no mortgage and no capital cost left to pay."

Added Erin Overturf of Western Resources Advocates, a party to the filing, "I think what this shows is that if you are a community that cares about acting on climate change and cares about clean energy, there's a huge opportunity for you to engage constructively with the utility and make a business case, not just a hippie case, that it's time to transition our energy."

Boulder's future with Xcel

It remains unclear, as of now, whether Boulder will be an Xcel customer in 2026 and beyond.

The commission also resisted a number of key aspects of Boulder's proposal for separation, which could present new challenges and costs for the city — in addition to the hurdle of getting voter support this November on an extension of the tax that funds municipalization.

But in any event, Boulder wouldn't be operating its own utility for at least about five years, and Xcel plans to continue getting greener in the meantime. So, regardless of whether Boulder's bid for energy independence succeeds, the city's already thinking about the kind of local action it can take to reach 100 percent renewables and significant reductions in carbon emissions.

"This was one of the things that surfaced when we were discussing potential settlements with Xcel," said Jonathan Koehn, Boulder's regional sustainability coordinator, referencing negotiations earlier this year and last. "How can jurisdictions like Boulder maximize local generation?"

A sign hangs on the fence on Xcel Energy's Boulder Service Center in March. (Jeremy Papasso / Staff Photographer)

According to Koehn, Boulder's peak consumption of electricity is about 250 megawatts. But there's a law in Colorado that limits Boulder to developing and interconnecting generation projects of 100 kilowatts or smaller.

That means even if Xcel does get to 55 percent in 2026, and the city is still a customer at that point, "we would have to cobble together quite a few smaller projects to fill in that gap" to reach the 2030 goal, Koehn said.

The current federal rule, meanwhile, allows for interconnection of projects up to 80 megawatts in capacity. And that's a barrier for Boulder, with or without a municipal utility.

Were the federal limit applied here, Koehn said, "that would allow us to do some large projects."

"What those are and where that would be located — that hasn't been explored yet. But the fact is that law has been superceded by a Colorado regulation."

'The economics have changed'

Early in the 2017 Boulder City Council race, some candidates are starting to declare that, if municipalization doesn't work, the city should "take the fight to the state level," as incumbent Councilwoman Mary Young said.

City officials already are eyeing the law Koehn mentioned as a priority for its next legislative agenda, and maintain an interest in state-level policy around rooftop solar generation and aggregation of individual energy customers' buying power, among other issues.

Many, including Xcel, have credited Boulder for the role that municipalization may have played in pushing the company in the direction of renewables, and in helping grow public support for clean energy.

And the rate of change has been rapid enough that one former Boulder councilwoman, KC Becker, now a state representative, views the energy sector through a much different lens today than when she voted in favor of municipalization as a council member.

"I thought in 2011 that we would be able to achieve higher levels of clean energy more quickly by separating from Xcel," Becker said, "and I think that's because Boulder was more willing to prioritize that than Xcel was at the time. I didn't think that the litigation or the process would be as long and costly as it's proved to be.

"Xcel's filing moves the whole state forward by showing other utilities that lowering carbon emissions can be profitable," she added. "Things have definitely changed since 2011, when Boulder and I supported municipalization, and I think that will continue, because the economics have changed."

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